Retail investors are being taken for a ride - they need protecting, says ROS ALTMANN
Share:
The recent attack on seven UK investment trusts represents a flashing red warning sign for UK markets and long-term investment trust shareholders. This long-standing successful British financial sector is under serious threat. Saba, a US hedge fund with no proven record of successfully managing long-term closed-ended investment portfolios through economic cycles, has launched an aggressive offence against CQS Natural Resources Growth and Income, Edinburgh Worldwide Investment, European Smaller Companies, Henderson Opportunities, Herald Investment Trust, Keystone Positive Change and US Growth.
There appears to be no coherent rationale for targeting these seemingly unconnected range of companies – which each hold very different types of assets. If Saba’s predatory move succeeds, there are significant risks for ordinary investors. Regulators and policymakers need to act with urgency to ensure the new Consumer Duty rules do protect investors as intended.
It seems that Saba is exploiting loopholes in UK financial market protections for shareholders. Threat: Saba, a US hedge fund with no proven record of managing long-term closed-ended investment portfolios, has launched an aggressive offence against seven UK investment trusts.
As Keystone chairman Karen Brade puts it, the hedge fund’s opportunistic tactics seek to seize ‘control of the board without a controlling shareholding, to pursue its own agenda’. There is no proper protection for retail shareholders or small pension investors and many may not even know what is happening.
